Federal Communications Commission Record 10 FCC Red No

FCC 95-54 Federal Communications Commission Record 10 FCC Red No. 6

FCC Red 1741 (1989), recon. granted in part and denied in Before the part ("Second Report and Order Recon."), 4 FCC Red 6489 Federal Communications Commission (1989). Because the Grade A contour of KGO-TV encom Washington, D.C. 20554 passes all of San Francisco, grant of the above-captioned application requires waiver of the one-to-a-market rule.3 2. Cap Cities bases its waiver request on ©the one-to- In re Application of a-market waiver standards adopted in the Second Report and Order. Under these criteria, the Commission presump First Broadcasting Company tively favors waiver requests involving station combinations (Assignor) serving the top 25 markets where there are at least 30 separately owned, operated and controlled broadcast li censees or "voices" after the proposed combination ("top and File No. BAL-940628EH 25 market/30 voice standard"). See 47 C.F.R. §73.3555, n.7. It also favors requests involving "failed" broadcast stations, KGO-AM Radio, Inc. (Assignee) that is, stations that have not been operating for a substan- . tial period of time, e.g., four months, or that are involved For Assignment of License© of in bankruptcy proceedings. Id. Other waiver requests are KSFO(AM), San Francisco, California evaluated on a more rigorous case-by-case basis, as set forth in the Second Report and Order. Id. While Cap Cities waiver request meets the top 25 market/30 voice standard,4 MEMORANDUM OPINION AND ORDER it nevertheless must be reviewed under the case-by-case standard because, as noted, the proposed assignment of Adopted: February 8,1995; Released: February 14, 1995 license also relies upon the revised local radio ownership limits. 5 Under this standard, the Commission makes a By the Commission: public interest determination based upon the following criteria: (1) the potential public service benefits of joint operation of the facilities; (2) the types of facilities in 1. The Commission has before it the above-captioned volved; (3) the number of media outlets owned by the application for assignment of license of KSFO(AM), San applicant in the relevant market; (4) the financial Francisco, California, from First Broadcasting Company difficulties of the stations involved; and (5) the nature of ("First Broadcasting") to KGO-AM Radio, Inc., and a re the relevant market in light of the level of competition and lated request for waiver of 47 C.F.R. §73.3555(b), the Com diversity after the joint operation is implemented. See Sec mission©s one-to-a-market rule. 1 KGO-AM Radio, Inc. is a ond Report and Order, 4 FCC Red at 1753-54. wholly-owned subsidiary of Capital Cities/ABC, Inc. ("Cap Cities"), which also owns the corporate licensees of 3. In support of its waiver request, Cap Cities submits a KGO(AM) and KGO-TV, both licensed to San Francisco, showing that addresses each of the five case-by-case factors.6 California.2 The Commission authorized Cap Cities to re Cap Cities first contends that the proposed combination of tain common ownership of KGO(AM) and KGO-TV in KSFO(AM) and KGO(AM) will create efficiencies by com 1989 on the basis of Cap Cities© showing that the San bining management personnel, as well as news, program Francisco market satisfied the Commission©s criteria for ming, and production staffs. Cap Cities estimates that staff waiver of the one-to-a-market rule. See Capital Cities/ABC, consolidation will reduce KSFO(AM)©s operating expenses Inc., 4 FCC Red 5498 (1989); see also In re Amendment of by at least $750,000 per year. Cap Cities contends that Section 73.3555 of the Commission©s Rules, the Broadcast additional savings will be realized by consolidating sales Multiple Ownership Rules ("Second Report and Order"), 4 offices, equipment sharing, and securing volume discounts

1 Section 73.3555(b) of the Commission©s rules prohibits the and KGO(AM) occurs within the San Francisco, California common ownership of radio and television stations in the same radio metro market, as defined by Arbitron, Inc., Cap Cities market if the 2 mV/m contour of an AM station or the 1 mV/m supplies audience share data from the most recent Arbitron contour of an FM station encompasses the entire community of survey available from that market at the time the instant ap license of a commonly-owned television station, or, conversely, plication was filed. See 47 C.F.R. §73.3555(a)(3)(iii). Those data if the Grade A contour of a television station encompasses the show that the combined audience share of KSFO(AM) and entire community of license of a commonly-owned AM or FM KGO(AM) in the metro market is 8.8 percent, and therefore station. See 47 C.F.R. §73.3555(b). below the 25 percent audience share limit set forth in the rule. 2 Because KGO-AM, Radio, Inc. is a wholly-owned subsidiary See 47 C.F.R. §73.3555(a)(l)(ii). of Cap Cities, its proposed ownership interest in KSFO(AM) is 4 As set forth in paragraph 8, infra, the San Francisco media attributable to Cap Cities under the Commission©s multiple market is the country©s fifth largest and contains 53 separate ownership rules. See 47 C.F.R. §73.3555, note 2. Cap Cities will broadcast "voices." hereafter be used to identify KGO-AM, Radio, Inc., as well as 5 See In re Revision of Radio Rules and Policies, 1 FCC Red the licensees of KGO(AM) and KGO-TV. 6387, 6394, n.40 (1992); see also Moosey Communications, Inc., 8 3 Because the principal community contours of KSFO(AM) FCC Red 5247 (1993)(consideration of one-to-a-market waivers and KGO(AM) overlap, Cap Cities must also meet the require under the case-by-case standard still appropriate where new ments of the radio ownership rule found in Section 73.3555(a) radio-TV combinations are created, pending the possible revi of the Commission©s rules. See 47 C.F.R. §73.3555(a)(l). Cap sion of the one-to-a-market rule in the outstanding TV owner Cities demonstrates that there are at least 15 radio stations ship proceeding in MM Docket No. 91-221). whose contours overlap the contours of the proposed com 6 It should be noted that "[n]ot all of the factors will be monly-owned stations. Because over 50 percent of principal relevant in every case." See Second Report and Order Recon., 4 community contour overlap of same service stations KSFO(AM) FCC Red at 6491.

2904 10 FCC Red No. 6 Federal Communications Commission Record FCC 95-54

on purchases of supplies and programming services.7 Cap the San Francisco market other than KGO-TV and Cities also maintains that the proposed station combination KGO(AM). As previously noted, Cap Cities demonstrates will allow the consolidation of its San Francisco radio that for purposes of the Commission©s local radio owner operations at the existing KGO(AM) facility, reducing rent ship rule, there are at least 15 radio stations whose con and utility expenses by approximately $213,000 per year. In tours overlap the proposed commonly-owned radio stations sum, Cap Cities projects savings of approximately $1.45 and that the combined audience share of KGO(AM) and million for the KSFO(AM)/KGO(AM) combination. Cap KSFO(AM) in the San Francisco metro market is 8.8 Citiesprojects that savings achieved through joint operation percent. See note 3, supra. of KSFO(AM) and KGO(AM) will result in public service 6. Fourth, with regard to the economic status of the and programming benefits made possible by enhancements stations involved in the proposed combination, Cap Cities to KSFO(AM)©s public affairs programming. In that con states that KSFO(AM) incurred an operating loss in excess nection, Cap Cities notes that it proposes to offer public of $2 million in 1994, and that First Broadcasting projects affairs programming on KSFO(AM) analogous to that of a similar loss in 1995 if the station is not sold. Cap Cities fered by KGO(AM), which Cap Cities asserts airs both notes that since selling KYCY-FM, San Francisco, Califor daily public affairs programming and regular public service nia, in October 1994, First Broadcasting has been unable to announcements.8 Cap Cities further notes that combining^ avail itself of efficiencies obtained by operating two com KSFO(AM) with KGO(AM) would enable KSFO(AM) to monly-owned stations in the market. avail itself of KGO(AM)©s community relations depart 7. The fifth factor relates to the nature of the relevant ment, which Cap Cities notes has received numerous market in light of the Commission©s concerns about diver awards for outstanding public service. With respect to sity and competition. Relevant indicia include the number benefits arising from its proposed ownership of KSFO(AM) of broadcast outlets, the number of separately-owned and and KGO-TV, Cap Cities maintains that although it intends operated "voices" in the market, and the presence of cable to operate KSFO(AM) and KGO-TV separately, and non-broadcast media. As to the number of broadcast KSFO(AM)©s affiliation with KGO-TV will enable stations, the Commission has held that, in the context of a KSFO(AM) to avail itself of KGO-TV©s experience in the one-to-a-market waiver, it will consider the "relevant TV local employment market, particularly KGO-TV©s access to metro market for radio stations and the relevant ADI [Area recruitment sources and knowledge of hiring conditions.9 of Dominant Influence] TV market for TV stations." See Cap Cities further maintains that KSFO(AM)©s affiliation Second Report and Order, 4 FCC Red at 1760, n. 101. Cap with Cap Cities© ABC Radio Network and the radio net Cities represents that the San Francisco-Oakland-San Jose work©s affiliation with ABC Television Network news oper ADI is ranked fifth in the United States and contains 18 ations will strengthen the news gathering resources of both AM stations, 32 FM stations, 21 TV stations, and over 15 KSFO(AM) and KGO-TV. daily newspapers. Cap Cities further represents that the 4. Second, regarding the technical facilities involved, Cap broadcast stations in the market are owned and operated by Cities affirms that KGO-TV is a VHP television station 47 different "voices." Additionally, Cap Cities notes that operating on Channel 7 with 316 kW effective radiated the San Francisco market is served by 67 separate cable power ("ERP") and an antenna height of 1670 feet above systems having a penetration rate of 67 percent, and that average terrain ("HAAT"). KGO(AM) is a Class A AM over 85 percent of households have VCRs. Cap Cities station operating full time on 810 kHz with a power of 50 argues that viewpoint diversity in San Francisco generally kW using a full-time directional antenna system. exceeds that of other markets in the United States, and that KSFO(AM) is a Class B AM station operating full time on the San Francisco market has a greater number of indepen 560 kHz with a power of 5 kW using a directional antenna dent broadcast "voices" than markets in which the Com system during nighttime hours only. In support of its con mission has recently granted requests for waiver of the tention that the subject facilities do not dominate the mar one-to-a-market rule under the case-by-case factors.10 ket, Cap Cities notes the presence of five other VHP 8. Discussion. In evaluating a request for waiver of the television stations in the San Francisco market, as well as one-to-a-market rule, the Commission©s goal "is to permit two AM stations with facilities comparable to KGO(AM) the public to benefit from such efficiencies of operation as and at least five AM stations with facilities comparable to may be achieved through the use of common facilities and KSFO(AM). staff, consistent with the maintenance of diversity and vi 5. Third, with respect to the number of other media gorous competition within the market areas involved." See outlets the applicant already owns in the relevant market, Second Report and Order Recon., 4 FCC Red at 6491. We Cap Cities affirms it does not own any broadcast stations in conclude that Cap Cities© showing in support of a waiver of

7 Cap Cities estimates that consolidation of computer systems result from common ownership of radio and television stations and staff in the stations© accounting, programming, production, in the same market even if the stations will be operated sepa promotion, sales, and traffic departments would result in sav rately. ings in excess of $450,000 annually. Cap Cities estimates addi 10 In support of its contentions. Cap Cities cites recent Com tional annual savings of $45,000 through joint purchasing of mission actions granting one-to-a-market rule waivers in administrative and production supplies. KVl(AM), 9 FCC Red 1330 (1994); BREM Broadcasting, 9 FCC 8 Cap Cities asserts that, under its ownership, KSFO(AM) Red 1333 (1994); and Moosey Communications, Inc., 8 FCC Red would air a talk radio format complementing that aired by 5247 (1993). Cap Cities also notes the Commission©s April 19, KGO(AM), which Cap Cities notes airs regular programming 1994 action granting a one-to-a-market rule waiver under the addressing issues facing the San Francisco community. "Top 25 Markets/30 Voices" standard and a related application 9 Cap Cities cites the Commission©s decision in Guy Gannett for assignment of license KKHI(AM)/KKHI-FM, San Francisco Publishing Co., 1 FCC Red 1787 (1992), in support of its conten from Buckley Broadcasting Corporation of California to Group tion that the Commission recognizes that, in evaluating requests W Radio, Inc. (Cal.) See In re Buckley Broadcasting Corporation for waiver of the one-to-a-market rule, efficiency benefits may of California, 9 FCC Red 1930 (1994).

2905 FCC 95-54 Federal Communications Commission Record 10 FCC Red No. 6 the one-to-a-market rules meets the Commission©s case-by Cap Cities observes, the Commission has granted waivers of case criteria, and that a waiver in this instance is consistent the one-to-a-market rule under similar circumstances. See with the public interest and would not have an adverse note 10, supra. effect on diversity and competition in the San Francisco 9. Accordingly, IT IS ORDERED, that the request for a market. 11 Cap Cities has shown that common ownership of waiver of the Commission©s one-to-a-market rule, 47 C.F.R. KSFO(AM), KGO(AM), and KGO-TV will create efficien §73.3555(b), IS HEREBY GRANTED, and, having found cies resulting in significant cost savings and the potential the parties thereto otherwise qualified, the application for for enhanced programming and service benefits. In particu assignment of license (BAL-940628EA) of KSFO(AM), San lar, joint operation on KSFO(AM) and KGO(AM) will Francisco, California, from First Broadcasting Company to enable KSFO(AM) to avail itself of KGO(AM)©s public KGO-AM Radio, Inc. IS HEREBY GRANTED. 15 affairs programming and community relations departments, resources that will enhance KSFO(AM)©s ability to air pub FEDERAL COMMUNICATIONS COMMISSION lic service and public affairs programming, as well as its ability to assess the needs of listeners in the San Francisco community. Additionally, the affiliation of KSFO(AM) with Cap Cities© ABC Radio Network and the radio net work©s affiliation with ABC Television Network news oper ations will strengthen the news gathering resources of William F. Caton KSFO(AM), enabling KSFO(AM) to better serve its com Acting Secretary munity. Moreover, Cap Cities affirms that the proposed combination enhances prospects for profitable operation of KSFO(AM), which Cap Cities notes has operated at a loss during the past year© under its present ownership. Cap Cities also demonstrates that the proposed combination will not create any undue concentration of ownership or con trol of broadcast media in the San Francisco market, which comprises the fifth largest ADI. Following the proposed acquisition of KSFO(AM), the market will be served by 58 radio stations and at least 21 television stations.12 Those 79 broadcast outlets will be owned and operated by 53 sepa rate entities. 13 Other "voices" in the market include at least 4 major daily newspapers and cable television, which has a penetration rate of 67 percent. While the technical facilities of the stations involved are significant, we note that the proposed combination does not present issues of market concentration inconsistent with the public interest given the highly competitive environment in the San Francisco market, both in terms of the number of other broadcast stations and the relevant market shares of the stations involved in this transaction. 14 Thus, we are persuaded that the public benefits of common ownership and joint opera tion of KSFO(AM), KGO(AM), and KGO-TV outweigh any negative effect on diversity and competition in the San Francisco market that the combination might engender. As

11 Our conclusion takes into account the public interest in a Cities/ABC, Inc. has reported a decision in Shepard v. American strengthened radio service made possible by waiver of the one- Broadcasting Companies, Inc., No. 88-954, ( Memorandum Opin to-a-market rule in this case. See In re Revision of Radio Rules ion and Order, D.D.C. April 15, 1992), motion for reconsider and Policies, 1 FCC Red at 6394, n.40. ation granted in part and denied in part, (Memorandum Opinion 12 See Broadcasting & Cable Yearbook (1994); see also M Street and Order, September 3, 1993), judgment further modified, Radio Directory (1995). (Memorandum Opinion in Support of Final Judgment, June 13, 13 Notwithstanding Cap Cities© assertion that following the 1994), notice of appeal docketed, July 7, 1994, constituting an proposed transaction the San Francisco market would be served adverse finding or adverse final action "taken by any court . . . by 71 broadcast stations owned and operated by 47 separate with respect to the applicant or parties to this application in a entities, analysis by the Commission©s staff indicates that follow civil . . . proceeding, brought under the provision of any law ing the transaction the relevant market will be served by 79 related to ... fraudulent statements to another governmental broadcast stations owned and operated by 53 separate entities. unit . . . ." The Shepard decision, which includes findings of 14 We note that there is substantial competition in the San litigation-related misconduct against Cap Cities© subsidiary Francisco market. As documented by Cap Cities, in the Winter American Broadcasting Companies, Inc., is presently under ap 1994 Arbitron Local Market Report for the San Francisco Sur peal. Our action here granting the above-captioned application vey Area, KSFO(AM) was tied for a ranking of twenty-eighth is without prejudice to whatever action, if any, the Commission with a 1.0 share and KGO(AM) ranked first with a 7.8 share. may deem appropriate in connection with the Shepard findings, See KVI, Inc., 9 FCC Red 1330, n.8 (1994). which are presently under review in connection with pending 15 In response to Question 14 of Assignee©s section of the applications for renewal of license filed by Cap Cities and its above-captioned application for assignment of license, Capital subsidiaries.

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